Gas slides, but crude notches gains in whipsaw trading

Crude rose Thursday, with U.S. oil ending a seesaw session marginally higher as traders dissected the impact of stronger-than-expected data in the world's largest economy, while the outlook in China grew more worrisome.

U.S. crude settled up 10 cents at $105.49 a barrel. Upside was limited by weak Chinese economic data that dimmed the outlook for fuel demand in the world's second-largest oil consumer, and U.S. production rose to its highest in more than two decades. China's relative weakness was highlighted by unexpectedly strong durable goods data that blew away analysts' expectations.

Brent crude rose 40 cents, to trade under $108 a barrel from lows of $106.40 a barrel.

Gas was the day's biggest mover, with gasoline and natural gas falling sharply. RBOB gasoline futures traded down 3.5 cents, to $3.019 per gallon, undercut by a rapid plunge in the cost of ethanol credits.

Ethanol credits, which must be purchased by gasoline blenders to comply with renewable fuels standards, traded below $1 per gallon in early U.S. activity, sharply down from last week's record levels of $1.50.

Traders said that the run-up in the credits, also known as Renewable Identification Numbers (RINs), had helped drive U.S. RBOB gasoline futures to four-month highs over $3.16 per gallon late last week. At the end of last year, RINs were trading at 5 cents per gallon, and refiners have said that the rise in the cost of the credits has pushed gasoline prices higher.

Meanwhile, natural gas futures fell after the Energy Department reported that nat gas stocks jumped by 41 billion cubic feet in the latest week, though the rise was less than the market had expected.

U.S. natural gas inventories on average were expected to have gained 46 billion cubic feet last week, according to a Reuters poll of industry traders and analysts. The Energy Information Administration data pushed down natural gas futures traded on the NYMEX, which fell by 1.4 percent, to trade at $3.65.

U.S. crude oil stockpiles declined last week for the fourth straight week, EIA data showed on Wednesday, while both gasoline and middle distillate stocks surprised with falls against expectations for gains.

U.S. crude inventories fell by just under 30 million barrels over the four weeks to July 19, the biggest four-week decline on record since 1982.